Community Sentiment Polling Results (NU4) and draft ZIP 1014

What worries me is that this ultimatum could potentially cost the ECC all the development funding in question (which I am very much against) and “wouldn’t put Zcash in a position to be successful” even more so than the other thing

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I’m worried they’ll get a smaller slice as a trade-off against ‘unlimited upside’, but we’ll see what the poll says. Hope it works out.

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Can the first question be “Does the community want to retain the ECC” ? or is that too loaded? it is essentially what is being asked. and I think it is a better way of wording it. Sure it is an ultimatum but that is what the consequences of voting “for caps” is.

I like things presented plainly.

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An update from the Foundation. We are ready to poll and excited for this stage of sentiment collection. Post copied here:

Polling Community Sentiment on ZIP 1014

After feedback from the community and ECC — and an unanticipated but greatly appreciated pause on the process over the holidays — we are ready to move forward on a second sentiment collection process to produce a final dev fund-related ZIP for NU4. For more details on the discussion around this ZIP and the process that lead us here, please read this thread on the forum. You can also peruse the Foundation’s highlighted list of relevant links on NU4 governance if you need a broader refresher.

“Improved ZIP 1012” is now ZIP 1014

To reconcile some final changes make things more readable for the community, we’ve made a new ZIP to use as a basis for this round of sentiment collection. You can view it here. You can see view the differences between ZIP 1012 and ZIP 1014 here. (many thanks to ZIP Editor Daira Hopwood for making this view available)

The poll timeline and constituency

The Foundation’s previous post stated that we are committed to running a final poll on this ZIP. As was written then, the Foundation is polling users who participated in the forum vote (filtered by accounts created before March 2019) alongside the current community advisory panel through a single Helios vote. I’ll be reaching out to them today, and asking them to opt out of participating by Friday, January 17th (note that they can still opt out by not voting in Helios). The poll will open the next day, and we will close the Helios poll on Monday, January 27th and announce results on Tuesday, January 28th. I personally expect we’ll be able to draft a final ZIP by the end of that week.

What we’re polling

A number of questions were brought up in discussion around some of the key pieces of ZIP 1014, and their resolution should be based on community feedback. After many rounds of feedback, the Foundation will be using the following polling questions to gauge the community’s preferred modifications to ZIP 1014.

Do you support the ZIP 1014 presented here? https://zips.z.cash/zip-1014 (ZIP 1014 is a lightly modified version of ZIP 1012, which had the most support in the previous sentiment collection poll. Note that all follow up questions in this poll assume ZIP 1014 as a basis; please read it carefully before answering the rest of this poll)

  • Yes
  • No

Using this ZIP as a basis, what should the distribution of the dev fund slices be?

  • ECC: 35%, MG: 40%, ZF: 25%
  • ECC: 40%, MG: 35%, ZF: 25%
  • ECC: 45%, MG: 30%, ZF: 25%
  • ECC: 50%, MG: 25%, ZF: 25%
  • Any of the above distributions is acceptable

Do you believe the Foundation should have independent authority in determining Major Grants, or should there be a new Major Grant Review Committee as prescribed in this ZIP?

  • The Foundation should have independent authority in determining Major Grants
  • There should be a new Major Grant Review Committee with near-complete authority
  • Either option is acceptable

Using this ZIP as a basis, should there be a US Dollar-denominated Monthly Funding Cap/Volatility Reserve for the shares to ECC, ZF, and Major Grants or should there be no restrictions? Note that ECC has indicated they plan to decline their funding if a US Dollar-denominated funding cap is imposed, while ZF has indicated that they have no issue with a funding cap. We are not measuring your approval of the specific amount of the Monthly Funding Cap in the ZIP; we are interested in your approval of the concept as a whole. The exact cap can be set by processes outlined in the ZIP.

  • There SHOULD NOT be a Monthly Funding Cap and Volatility Reserve
  • There SHOULD be a Monthly Funding Cap and Volatility Reserve
  • Either option is acceptable

ECC has indicated they plan to decline their funding slice if there is a Monthly Funding Cap/Volatility Reserve restriction. If the community decides on a Monthly Funding Cap/Volatility Reserve and ECC declines their funding, where should their slice be redirected?

  • Major Grants
  • Zcash Foundation
  • Miners

The Foundation’s expectation for a final NU4 ZIP

The Foundation believes the results from this poll will be clear enough to assemble a final ZIP based on the community’s will — one which the Foundation can honor in the Zcash trademark agreement and support in Zebra. Happy polling to all participating community members and thanks to everyone in the Zcash community for their contributions to this historic process.

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Did the ZF ever indicate they have no issue with no funding cap? And if not what was that (issue) specifically (sry can’t remember)
(Post zip-modification I mean, not just because zip 2012 didn’t include it)

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@amiller wondering if there is (unofficial) way for hodlers to vote these same questions :sweat_smile:. Not sure how many of the community members are actually holders of ZEC.

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yall are welcome to send votes to the same stake polling address as before, and I’ll help reporting on them the same way. But I’m not going out of my way to steer people to vote with this stakeholder method until the problems discussed earlier are addressed

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Speaking for the Electric Coin Company, we will not waver in our commitment (stated here, here, and here) to honor and support the community’s collective decision. We will use our software support process for the zcashd codebase and our shared rights to the Zcash™ trademark to support the community’s decision.

We will support the decision even if that decision includes a U.S.-dollar-denominated funding cap. In that case ECC will not accept the role of developer who receives developer funding, but we’ll still implement the consensus rules in zcashd for Network Upgrade 4, and we’ll still support the decision with the trademark.

(As we wrote here, we wouldn’t accept the funding under a U.S.-dollar-denominated funding cap, because we believe that the resulting incentive misalignment between coin-holders and developers would prevent the developers from succeeding long-term, thus putting the coin-holders at risk of not seeing the results they hoped for.)

Okay, other than that, we are delighted by the creative, thoughtful, respectful, constructive community that we’ve seen come to the fore through this complex and difficult decision process. Way to go! You’re making history here, even most of the world doesn’t know it yet. I guess that’s how history is usually made. :slight_smile:

Edited to add:
P.S. Of course the effective and final ratification of the community’s decision will come when the economic majority of the Zcash users opt in by running software which implements ZIP-1014 or else running software which doesn’t.

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Well at this point I would have to change my stance on the matter anyways simply because the ECC is providing a stronger argument against the cap then the ZFND is willing to provide for it. I say willing because I’ve asked a couple reasonable questions (not talking about you Shawn, thank you) directed primarily towards the ZFND that no one can answer and of which I don’t need to ask the ECC their versions because they’ve answered them already.

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What happens to ECC (hypothetically!!) if community doesn’t hire ECC? Can you share high-level insights (if you can)?

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Frankly I would prefer to see measured responses on the part of the ZFND so the community (and voting members) can reflect on what they feel is best. Their recent actions only reinforce my positive perception of them.

However, I personally continue to express skepticism towards the reasons stated by the ECC for no USD cap. Having an unlimited slice can provide a proper alignment of incentives but definitely does not ensure it. When the ECC attempts to hire new talent I’m assuming that potential employees are going to value the future ZEC they may receive (given the vesting schedule) in terms of future USD. And if these individuals see a cold cryptocurrency market they will require more ZEC to compensate them for the additional risk they are taking on. The same principle can apply in the opposite direction.

This is precisely why I asked @joshs whether the ECC put itself in a position where they would not be able to meet these future obligations under a cap. He responded that it is not an issue which I am glad to hear.

And as a final side note, it would be very nice to see more discussion and feasibility of the ECC becoming a non-profit so we can be prepared for that possibility. I recall there being some discussion on the forums about that but I don’t know how stale that information is.

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Daira posted some pretty good reasons, always good at shredding logic so worth re-reading. Worth reading the whole thread again before voting if you ask me…

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Josh’s answer to your question is one of the things I take into account because the reciprocal version I presented to the ZF ND could no other version of this accountability measure work technically goes unanswered however given how the poll is constructed with the bold font I’d say yep that’s pretty much answered
Both sides have an ultimatum here and I believe wholeheartedly that the ECC continuing work on Zcash is best period

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Imagine that there would be a monthly profit cap for every Zcash holder. The
drastic consequences of a cap are easy to see in this case.

Any form of a Monthly Funding Cap weakens heavily the development of Zcash.
Don’t forget - Zcash is in tough competition in a very fast moving environment.
All available resources should be used - that’s what the competitors do.

The ZFND is acting very harmful in this particular case. Why would you try
to weaken the talent that brought zero knowledge proofs to blockchains
in an incredibly short time?

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Because it is the choice of the community in the first vote! Everyone forgets the fact that both the fund and the company agreed that the future will be determined in the elections, now the fund is defending this position and ECC decided to change its mind.

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Hi @dontbeevil,

Thanks for your question:

Since the question of non-profit status was raised by the Zcash Foundation last August, and frequently mentioned by various community members ever since, ECC has been researching pros and cons as well as consulting with legal counsel about the legal implications, and with the owners (shareholders or “units holders”) of ECC about whether they would support it.

It’s crucial to understand that such a change is not up to the management of ECC (me and my leadership team and the ECC Board of Directors), it is up to the owners of ECC. Any change like this is effectively the owners of ECC donating their property (their share of the ECC company) to the community, so it requires their approval. As part of our research we’ve spoken with a number of them about this possibility, and the ones we’ve talked to have been very encouraging about it. Based on what they’ve said, they believe in the mission and in the value of Zcash, so if there are good reasons why this change would support those, then the units holders we’ve talked to have said they will support it.

The particular model we’ve been focusing our research on is the “corporate/non-profit hybrid” model in which there is a company (Electric Coin Co) which is the wholly-owned subsidiary of a new non-profit org. That model means that the management and organization of ECC doesn’t change, but the ownership is donated by the current owners to a new non-profit charity which serves the public interest. This structure seems to mitigate some of the risks and downsides listed in the Cons section below. Crucially, an uncapped (ZEC-denominated, not USD-denominated) Dev Fund would be necessary to mitigate some of the Cons.

As it stands, we see the following potential pros and cons of ECC converting from a for-profit company to a non-profit organization.


Pros:

Incentive alignment: Moving to this structure would better align Zcash holder and ECC incentives by eliminating the potential for the owners and the community to start competing with each other for the ECC’s resources — including the time and attention of the ECC employees. Throughout the Dev Fund process, the community has clearly articulated a desire to ensure that ECC shareholders are not able to extract any of the Dev Funds for their own profit. The transparency that ECC has always practiced, combined with the transparency and accountability requirements in ZIP 1014, plus the ability for the community to update the consensus rules would — we think — prove sufficient to ensure that. However, donating ECC to a new non-profit would add a layer of legal enforcement, making it so that the (former) owners do not have any remaining legal standing to claim a portion of the Dev Fund. In addition, donating ECC to a new non-profit would go above and beyond simply ensuring that Dev Fund money cannot be redirected, by additionally ensuring that no other misalignment between owners and community could potentially arise in the future. The incentives of ECC would — in that scenario — be solely aligned with the community and with all coin-holders.

A clean slate: Donating ECC to the community would be an act of charitable contribution by the owners to the public good, after which they would no longer be owners. This would eliminate a lot of legal ties between the owners and ECC (think tax reporting and compliance, as just one example). It would disentangle the reputation of ECC from the reputations of the owners. Most of all it would make it clear to all that the (now former) owners do not have any ongoing control over or any responsibility for the future actions of ECC under its new ownership.

Optics: A lot of people around the world — including people who know almost nothing about Zcash or its history and are hearing about it for the first time — may assume that a company means greed and exploitation and that a non-profit means virtue and public service. It is unfortunately not true that a legal structure can guarantee good behavior. If you look closely you’ll find out that in practice non-profits succumb to corruption and mismanagement at least as often as for-profits do, and that strong transparency and accountability mechanisms are still essential, regardless of the legal status of the organization. But by converting ECC to a non-profit we would at least be accurately signaling to people who have a simplistic understanding of these things (which is most people) that the intent of ECC is to serve the mission and the public good.

Tax improvements: ECC and/or its owners currently pay taxes to the U.S. government as a for-profit company. While converting to a non-profit wouldn’t eliminate tax requirements, it may lessen the burden, leaving more ZEC available to fuel the mission. (It could also radically simplify the process of complying with tax requirements, which is currently very complex and is a major time-suck.)


Cons:

Time and money and our execution bandwidth: Changing the structure would take time and money to accomplish, and during the transition process it would detract from our capacity to push forward other initiatives in support of Zcash. We have already been paying a cost in this way since last August, in order to determine what the options are and what the legal, taxation, and organizational consequences would be. If we continue down this path it will continue to use some of our organizational bandwidth. We are unsure if it would be possible to complete the transition before NU4, which is when the next dev fund would activate. We think there’s a good chance it could be completed by then, which would simplify matters if the transition were already complete before any new dev fund kicks in.

Potential for inefficiency: Often non-profits do not perform as well as for-profit entities. This may be due to their funding relying on donors and all that entails, but there could be a number of factors involved. The “corporate/non-profit hybrid” structure in which there is a traditional execution-oriented company (the wholly-owned subsidiary) could potentially mitigate this risk.

Recruiting and retention: The competition for top talent is fierce and we need to be able to recruit and retain top talent. Normally startups will use equity incentives, something not available to us in a non-profit model. An uncapped (ZEC-denominated) dev fund would potentially mitigate this risk by allowing ECC to use ZEC as a substitute for equity incentives.

Optics: Just as there are a lot of people who think “non-profit” inherently means “virtuous and trustworthy”, there are a lot of people who think “non-profit” inherently means “inefficient and doomed to stagnation”. Hearing that “ECC is a non-profit” could make people incorrectly think that ECC is incapable of generating revenue from its own products or services, or of entering into commercial partnerships in pursuit of its mission. These would be misunderstandings that would inhibit ECC’s ability to execute. These misunderstandings may be mitigated by the “corporate/non-profit hybrid” model, in which the wholly-owned corporate subsidiary could present a traditional corporate face to the world, can generate revenue through its own products and services, and can enter into revenue-generating commercial agreements with business partners. It’s just that none of the revenue generated by such activities can be fed back to any profit-taking owners, because there are no owners, just the non-profit charity, which directs all funds to the furtherance of the mission in the service of the public.


Conclusion: We are still actively exploring a non-profit structure. Further work may reveal that some of what we’ve already learned (above) turns out to be wrong, or might turn up other important considerations. I hope this helps.

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That’s not right.
The future will still be determined by elections.

Catching up here @Autotunafish — in our first post-sentiment collection blog post we wrote about our first edits to ZIP 1012 where we did not think the cap was necessary for the ECC:

A major difference between ZIP 1012 and ZIP 1013 is the presence of a dollar-denominated cap in ZIP 1012. We’re in favor of this cap for the Foundation, but we don’t think such a cap is necessary for the ECC if we add ZIP 1010’s strict accountability requirements.

However, because of community feedback we scaled back our changes and reintroduced the cap for everyone to minimize our changes to ZIP 1012, believing it to be the community’s intent that the cap remain. This thread clearly demonstrated that such an assumption was misplaced, and that’s why I agreed (upthread a while ago) that we should poll beyond just yay/nay of our modified ZIP to gauge community sentiment around a cap before assembling a final ZIP. This final poll is the result. To be clear: the Foundation intends to honor the community’s choice; if the majority of the community disapprove then we will support removing it. Our only desire here is to accurately reflect the community’s will.

The Foundation believes that Zcash could be successful with or without cap, while the ECC disagrees. We will accept the community’s decision whatever the outcome. I continue to be personally indifferent to the cap, but I have specifically challenged the ECC in this thread to explain their rationale as I thought the community deserved a better explanation…and I view it as my (and the Foundation’s) duty to act as a check/balance on the ECC’s power.

Can you reiterate which questions haven’t been answered and I will seek to rectify the Foundation’s omissions? I’ve been doing my best to answer questions directed at the Foundation but this thread is honestly getting difficult to navigate.

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Why is it wrong?
Can you clarify why the second election is taking place? Where it was voiced initially, why in the elections they consider only a new proposal and a proposal that won last time and which does not accept ECC?
The future has already been chosen, but because ECC said that this proposal will not work, everything is done in order to give the community a second chance to do everything “right.”
Moreover, the success of the fact that everything will be normally absent.

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These ones specifically though I would consider some of them answered, thank you but the fact remains that the poll could be summarized to “ECC? Yay nay” at this point and for me the answer is yay I really wish some kind of middle ground could have been found here

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